JERUSALEM – Palestinian leaders asked the U.S. to support a demand that the Palestinian Authority be allowed to open official representative institutions in eastern sections of Jerusalem, including a sanctioned headquarters in Israel’s capital, WND has learned.

Political sources in Jerusalem said Prime Minister Ehud Olmert is studying the request, which comes ahead of a U.S.-sponsored Israeli-Palestinian summit scheduled next week in Annapolis.

The opening of PA offices in Jerusalem would serve as a major statement that the city would become the capital of a future Palestinian state, said senior Palestinian negotiators speaking to WND.

In line with previous Israeli-Palestinian accords, the PA until now has been barred from conducting political activity in Jerusalem, although it maintained an office, called Orient House, in an eastern Jerusalem neighborhood that previously functioned as a de facto PA headquarters.

Orient House was closed down by Israel in 2001 following a series of suicide bombings in Jerusalem and information Israel said indicated it was used to plan and fund terrorism. Thousands of documents and copies of bank certificates and checks captured by Israel from Orient House – including many documents obtained by WND – showed the offices were used to finance terrorism, including direct payments to the Al Aqsa Martyrs Brigades terror group.

Palestinian officials speaking to WND said they are urging the U.S. to support what they said is a key demand allowing the PA to open official institutions and to reopen Orient House to serve as their headquarters.

The PA already hired a new director for Orient House, Adnan Husseini, the former director-general of the Waqf, or Islamic custodians of the Temple Mount, said the Palestinian officials. Husseini’s cousin, Faisal Husseini used to run Orient House and served as the PA’s main representative in Jerusalem until his death in 2001.

“The U.S. has completely backed us on our legitimate requests that Israel halt all settlement expansion and dismantle illegal outposts,” said a senior Palestinian negotiator speaking on condition of anonymity. “We are urging the Americans to now back us in our request to open institutions in Jerusalem.”

Olmert today told the Knesset that Israel would not establish any new Jewish communities in the West Bank and will begin to dismantle what are termed existing illegal outposts, or Jewish structures built without government permits.

At the Annapolis summit, Olmert is widely expected to outline a Palestinian state in most of the West Bank, which borders Jerusalem and is within rocket range of Tel Aviv and Israel’s international airport. Hamas leaders, including the group’s chief in Gaza, repeatedly have vowed to take over the West Bank if Israel withdraws from the strategic territory. Hamas in June seized the Gaza Strip, overrunning all U.S.-backed compounds of Abbas’ Fatah organization.

There have been reports – denied by Olmert – that the prime minister will also seek to hand over eastern sections of Jerusalem to Abbas.

Last month, Olmert hinted he would be willing to divide Jerusalem, asking during a speech whether it was “really necessary” to retain certain Arab neighborhoods in Judaism’s capital.

“Was it necessary to also add the Shuafat refugee camp, Sawakra, Walaje and other villages and define them as part of Jerusalem? On that, I must confess, I am not convinced,” stated Olmert at a special Knesset session to mark the sixth anniversary of the assassination of former government minister Rehavam Ze’evi, who drew up the 1967 map.

Vice Premier Haim Ramon, a member of Olmert’s ruling Kadima party, last month reportedly mapped out a future partition of Jerusalem under a deal with the Palestinians.

Ramon wrote in a letter to Jerusalem City Councilman Nir Barkat, according to the Israeli newssite YnetNews.com, that under his plan, “The Jewish neighborhoods (of Jerusalem) will be recognized as Israeli and under Israeli sovereignty. Accordingly, the Arab neighborhoods will be recognized as Palestinian.”